Fifty-two percent of retailers see their holiday sales rising, with overall growth averaging 2.2 per cent above last year. That's the most subdued prediction since the Index was established in 1994. Last year's forecast was 4.5 percent, although less than 40 percent of retailers hit it.

The National Retail Federation is forecasting modest holiday gains across the U.S. It predicts sales will rise 4 percent -- the smallest increase since 2002's 1.3 percent.

"Fall sales have been hurt by warm weather, uncertainty over auto contract negotiations and state budget talks, and general economic challenges," said MRA Chairman and CEO Larry Meyer. "But given the momentum of recent months, most retailers are looking forward to a positive, although subdued, holiday season."

The Michigan Retail Index for September showed that 35 percent increased sales over the same month last year, while 47 percent recorded declines and 16 percent saw no change. The results create a
seasonally adjusted performance index of 46.5, down from 52.4 in August.

Looking ahead, 52 percent believe their sales will increase for the 4th Quarter over the same period last year, while 27 percent say sales will decline and 17 percent expect no change. The results create a seasonally adjusted outlook index of 62.2, down from 65.2 in August.

The Michigan Retailers Association is the unified voice of retailing in Michigan and the nation's largest state trade association of general merchandise retailers.

Note: William Strauss, Senior Economist and Economic Advisor with the Federal Reserve Bank of Chicago, can be reached at 312.322.8151.

Michigan Retailers Association/Federal Reserve Bank of Chicago

Michigan Retail Index

September 2007 results
Index figures dating to July 1994 are available at www.retailers.com/news/retailindex.html

September Performance
Retailers reporting increased, decreased or unchanged sales, inventory, prices, promotions and hiring compared to the same month a year ago
(numbers in parentheses indicate August results)

            % Increased   % Decreased   % No Change  Index*       Responses
Sales           35 (42)       47 (36)        16 (20)      46.5 (52.4)     99 (120)
Inventory     32 (31)       33 (24)        30 (40)      44.6 (46.8)     96 (116)
Prices          28 (29)        10 ( 6)        53 (59)      55.0 (59.5)     92 (115)
Promotions  29 (24)          9 ( 8)        54 (62)      55.8 (54.7)     93 (115)
Hiring          11 (12)        16 ( 7)        66 (77)      45.0 (50.5)     94 (118)

Outlook for Next 3 Months
Retailers expecting increased, decreased or unchanged sales, inventory, prices, promotions and hiring compared to the same period a year ago
(numbers in parentheses indicate August results)

            % Increased   % Decreased   % No Change  Index*       Responses
Sales           52 (54)       27 (18)         17 (24)       62.2 (65.2)    97 (118)
Inventory     31 (38)       31 (22)         31 (32)       51.8 (52.5)    94 (113)
Prices          29 (32)          8 ( 7)         53 (53)       56.9 (59.2)    91 (113)
Promotions   41 (44)          9 ( 7)         41 (44)       59.7 (62.9)    92 (116)
Hiring          10 (15)        16 ( 9)         63 (70)       41.6 (49.8)    90 (115)

September Sales Performance & Outlook for Next 3 Months, by Region
(the first number indicates sales performance for the month; the number in parentheses indicates outlook for the next three months)

                % Increased     % Decreased     % No Change
North              35 (35)         59 (35)            6 (18)
West              47 (53)         35 (29)           18 (18)
Central           18 (53)         53 (35)           23 (12)
East               37 (37)         50 (25)           13 (38)
Southeast       36 (61)         50 (19)           14 (17)

Question of the Month
What is your current expectation for your percentage sales growth over last year for the holiday season?
Average: 2.2%

*Seasonally adjusted diffusion index. A diffusion index, which is the sum of the percent of respondents indicating increase and half the percent indicating no change, is calculated and then seasonally adjusted using the U.S. Census Bureau's X-11 Seasonal Adjustment procedure. Index values above 50 generally indicate an increase in activity, while values below 50 indicate a decrease.

Michigan Retailers Holiday Sales Forecasts/Results

Season        Pre-season forecast                Post-season result
---------------------------------------------------------------------------------
           % members       average %       % members         average %
           expecting          sales change    achieving             sales change
           sales increase                           sales increase

2007            52               + 2.2
2006            50               + 4.5                39                       *
2005            51               + 5                   39                    -1.9
2004            63               + 7                   37                    0.89
2003            67               + 5                   45                      0.3
2002            57               + 4                   28                     -3.2
2001            49               + 6                   45                      3.3
2000            62               + 9                   25                      0.0
1999            75               +11                  56                   + 5.9
1998            74               +10                  62                   + 8.2
1997            74               +12                  63                   + 8.1
1996            75               +13                  46                   + 5.4
1995            78               +12                  42                   + 1.9
1994            78               +11                  68                   +12.0

Source: Michigan Retail Index, a joint project of the Michigan Retailers Association and Federal Reserve Bank of Chicago.

*2006: 23.1% greater than 5% sales gain; 15.9% less than or equal to 5% gain; 10.4% no change; 16.5% less than or equal to 5% loss; 34.1% greater than 5% loss.